### Resources by title

Click below to find online resources specific to these Cambridge titles:

Resources for more titles

Jargon Buster

### What is it?

A basis point is a unit of measurement which is used in the financial world to describe percentage changes in rates or values of financial instruments. One hundred basis points are equal to one percentage point meaning that one basis point is equal to 0.01%. The term is generally used to talk about changes in interest rates or bond yields as the changes are often quite small.

### Why is it in the news?

With movement in interest rates due to monetary policies set by central banks as well as changes in sovereign bonds held by governments, basis points are mentioned quite often in articles about these topics. People in finance also tend to talk about basis points rather than percentages and they are used when discussing how much banks have to pay to borrow money. The basis points are then used to determine the percentage of interest banks charge their customers.

### How can I use it in class?

Start by asking students if they have heard the term. If not, read the definition to them and clarify their questions. Do some simple calculations with them to make sure they understand how the system works. Give them an example of a central bank raising the interest rates by 25 basis points. Ask them to then figure out how much the new interest rates would be if they started at 2.50%. (The calculation is: 25 basis points X 0.01% = .25 + 2.50 % which comes to 2.75%.)

##### Vocabulary

Ask students to find words in the article ‘German Bund Yield rise to One-Week High on Growth Signs’ which match the definitions below. The definitions are in the same order as the words in the article.

1 went up (Par 1)
2 shrank (Par 1)
3 a guess about the outcome of something (Par 2)
4 reduced by a large amount (Par 2)
5 money earned on bonds or securities (Par 2)
6 paid back a long time in the future (Par 3)
7 first (Par 5)
8 grew (Par 6)
9 speed (Par 6)
10 put together (Par 10)
11 quoted (Par 11)
12 the difference between the bid price (what the buyer will pay) and the ask price (the amount the seller would like) of a security (Par 11)

##### Follow-up questions

• What reasons are there for government bonds to go up or down? What factors lie behind these changes?
• How much influence do you think forecasts made by economics have on the markets?
• What causes economies to expand or contract?
• How does the public react in these two cases?

German Bund Yields Rise to One-Week High on Growth Signs; Spain Bonds Drop, Bloomberg
Top Funds See Yields at One-Year Lows on Series of Rate Cuts: India Credit, Bloomberg
Sweden cuts its main interest rate on eurozone fears, BBC
Australia's economy expands 2.5%, led by mining, BBC

### Key

1 climbed, 2 contracted, 3 speculation, 4 pared, 5 yield(s), 6 long-dated, 7 initial, 8 expanded, 9 pace, 10 compiled, 11 cited, 12 spread

See bear market in the Cambridge Business English Dictionary

### What is it?

A market condition in which the prices of securities are falling and widespread pessimism causes further falls in the market. As investors anticipate losses in a bear market, selling continues, which then creates further pessimism. Although figures can vary, a downturn of 20% or more in a share index, such as the Dow Jones or FTSE over at least a two-month period, is considered a sign that a bear market has begun.

### Why is the term in the news?

In the US, commodities slumped as signs of slowing global growth sent an index of 24 raw materials into a bear market as crude oil, gold and silver tumbled and Asian markets have entered the worst bear market conditions in 35 years.

### How can I use it in class?

##### Discussion

The term can be used to discuss a range of points with your students including the following:

• Have your country's financial institutions entered a bear market?
• Is there anything a government can do to reverse a bear market?
• How can a bear market affect a nation's economy?
• What is the opposite of a bear market? (A bull market)

Archive
<< Start < Prev 1 2 3 4 5 6 7 8 9 10 Next > End >>

Page 7 of 70

• #### The import...

Leila

Very good points and so true. So I think the take...

• #### Profession...

waleed

good work guys and thannnnnnnnnk you for this

Simon Manners

Hi Mung,

The audio CDs are sold separately from the...

Mung Nguyen

I bought this book last week, but I didn't have CD...

• #### NEW: Recru...

Marjorie Rosenberg

Mary, I am sure you could try it out with B2s as w...

Does psychology play a part in successful L2 communication? Should it form part of training?

57.7%
5.5%
36.8%